Zaid Al-Ali
Political culture has also not helped. Firstly, political parties by and large do not have clear policy statements or political preferences other than on very discrete issues, many of which are either not particularly important in the lives of ordinary people, or which are unattainable in the short run. Secondly, and perhaps even worse, political leaders are still unclear what it means to establish a government programme. The reality is that the crushing majority of Iraq’s political elite agrees on the vast majority of issues. Practically no one would disagree that hospitals, universities, transport should all be approved. What is lacking however is a clear plan on how to achieve these goals, whether through a prioritization of objectives, or by exploring methods of financing, or by sequencing specific events in order to maximize their impact.
The practical consequence is that there is little rhyme or reason to Iraq’s law making process. As required by the 2005 constitution, the council of representatives acts upon the instructions of the government and debates and votes on legislation. However, a reading of the laws that are issued by the council clearly shows that the government does not have an overarching strategy on Iraq’s main challenges.
One of the areas that are impacted by this situation is macroeconomic policy. Iraq’s economy is currently dominated by the oil industry, and it has been state policy since 2005 to pass a series of laws to bring order to the oil industry. One of the laws that successive governments and parliaments have attempted to pass since 2005 is a national oil company law. Drafts have been circulating since 2007 at least but there wasn’t sufficient consensus within parliament to reach a vote, and so all the drafts that were under consideration at that time were all eventually withdrawn.
In 2018, the then parliament managed to construct a consensus around a particular draft and adopted the Iraqi National Oil Company Law, which was published as Law 4 (2018). The Law provides for the establishment of INOC as a dominant force in the oil industry. It provides that the ownership of all state owned companies that currently belong to the ministry of oil should be transferred to INOC. It also provides that INOC should be active in both the upstream and downstream industries, that it should be involved in policy making for the oil industry, and that it is exempt from a series of laws that are designed to govern the behavior of state-owned companies Iraq.
While there is significant reason to question and propose alternatives to all these principles and measures, they are all decisions that reflect a certain vision for the role that INOC should play in the future. There are other provisions however that do not have a clear rationale and are evidence of the unfocused law making process referenced to above.
In particular, article 12 provides that INOC should transfer part of the profits that it generates in each year to three specific funds, namely a ‘Citizen Fund’, a ‘Generations Fund’ and a ‘Reconstruction Fund’. What is particular about this provision and about the reference to these three funds is none of them appear to have been established under Iraqi law. There is no reference to any relevant or corresponding legislation in Law 4 (2018) to any law that might have established these funds. There is also no explanation as which entity or officials manage these funds or what their purpose might be.
Article 12 is a perfect illustration of the incoherence of Iraq’s law making process. From the reference to these three funds, we know that some elements within government and parliament favor the establishment of several sovereign wealth funds, each with its own specific mandate. We also know that no legislation supporting the establishment of these funds was put forward for approval, almost certainly because there was no majority within parliament for the passage of such legislation.
The result is that, until these funds are actually established in law (assuming this ever happens), we will be left with an incoherent piece of legislation. There is simply no fund for profits to be transferred to by INOC as required by Article 12 of Law 4 (2018).
This reality, and other elements of incoherence in Law 4 (2018), are evidence of the symptoms discussed above. As a result of the country’s constitutional system and political culture, Iraq’s government and parliament have not established a coherent macroeconomic policy in the country. Laws that are adopted are only partially applicable, and provisions are suspended by mere fact that corresponding legislation is not adopted. Meanwhile, underlying challenges in the country’s key sectors (the economy, delivery of services, etc.) are only addressed through incremental and partial remedies that are not part of an overall strategy and which may end up making things worse in practice.
Iraq’s institutions will have to do better than this, which means that some major change or reform in the law making process will have to be made. Either Iraq’s political parties start taking policy design far more seriously, or the constitutional and political system will have to be redesigned to force them to do so, assuming that is even possible. In any event, the road ahead will be difficult for the country and its people.